Asia-Pacific insurers are under intensifying pressure to strengthen their preparedness for climate-related risks, as extreme weather events increasingly expose structural weaknesses in underwriting, capital allocation, and long-term risk planning. What was once viewed as a narrow underwriting concern has now evolved into a systemic financial challenge affecting the broader stability of insurance markets.
A recent survey conducted by MSCI, Inc., covering 50 of the world’s largest property and casualty insurers and reinsurers, highlights a growing disconnect between awareness and implementation. While many firms believe they are individually equipped to manage climate risk, far fewer express confidence in the industry’s collective readiness.
Rising Concern, Limited Integration
In the Asia-Pacific (APAC) region, half of insurers surveyed believe the industry is not adequately prepared for physical climate risks. This compares with 62% in North America and 46% in Europe, suggesting a widespread but uneven perception of vulnerability.
The concern becomes more acute when considering systemic implications. All APAC respondents reported moderate to very high concern about the impact of physical climate risks on financial systems—surpassing the already high global average of 88%. Yet, despite this heightened awareness, meaningful integration into business operations remains limited.
Approximately 64% of APAC insurers expressed strong concern about climate risk, but 63% admitted they are still in the early or intermediate stages of embedding these risks into underwriting models, enterprise risk management, and capital frameworks. This gap between recognition and execution underscores a critical weakness in the region’s insurance landscape.
Escalating Losses Highlight Urgency
Data from Swiss Reinsurance Company Ltd underscores the financial urgency of the issue. In 2025, global insured losses from natural catastrophes reached approximately $107 billion. Notably, so-called “secondary perils”—including floods, storms, and wildfires—accounted for a staggering 92% of these losses.
A broader breakdown of catastrophe-related losses is presented below:
| Category |
Estimated Loss (2025) |
Share (%) |
| Total economic losses |
$220 billion |
100% |
| Total insured losses |
$107 billion |
49% |
| Secondary perils contribution |
~$98 billion |
92% |
| Uninsured losses (approximate) |
$113 billion |
51% |
Despite a record 49% of economic losses being insured, protection gaps remain especially pronounced in emerging markets across APAC, where 80% to 90% of catastrophe-related losses often go uninsured. This leaves households, businesses, and governments highly exposed to financial shocks.
Swiss Re further warns that insured losses are likely to continue rising due to demographic expansion, increasing asset values, and escalating reconstruction costs. Historically, insured losses have grown at an annual rate of 5% to 7%. In a severe loss scenario, global insured losses could surge to as much as $320 billion within a single year.
Regional Disparities in Preparedness
The survey reveals stark regional differences in climate risk integration:
| Region |
Risk Integration into Management |
Underwriting Preparedness |
| Europe |
68% |
79% |
| North America |
~33% |
Moderate |
| Asia-Pacific |
36% |
23% |
European insurers appear to be leading in both integrating climate risk into enterprise risk management and preparing underwriting frameworks. In contrast, only 36% of APAC insurers have incorporated physical climate risks into their overall risk management systems, and just 23% consider their underwriting practices well-prepared.
Regulatory Pressure and Governance Gaps
Regulators across APAC are responding with increased scrutiny, demanding stronger board-level oversight, improved risk controls, and more robust climate-related disclosures. However, governance frameworks within insurers have yet to fully align with these expectations.
A particularly notable shortcoming lies in accountability. While many insurers publicly acknowledge the importance of climate risk, few have embedded climate-related targets into executive remuneration or performance evaluations. This disconnect weakens incentives for senior leadership to prioritise long-term resilience over short-term financial performance.
Bridging the Gap
To close the climate readiness gap, APAC insurers must accelerate the integration of climate risk into core business functions, invest in advanced risk modelling, and align executive incentives with sustainability objectives. Without these changes, the region risks falling further behind as climate volatility intensifies.
Ultimately, the challenge is no longer about recognising the threat—it is about translating awareness into decisive, systemic action.
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